Collins v. BAC Home Loans Servicing LP

Citations: 912 F. Supp. 2d 997; 2012 WL 6190856; 2012 U.S. Dist. LEXIS 176026Docket: Civil Action No. 12-cv-00375-WYD-KMT

Court: District Court, D. Colorado; December 11, 2012; Federal District Court

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The order affirms and adopts the recommendation of Magistrate Judge Wiley Y. Daniel regarding Bank of America's motion for summary judgment and Michael A. Collins's motion for leave to amend his response. Collins, proceeding pro se, had previously filed a lawsuit against Countrywide Home Loans in 2008, which was removed to federal court and resulted in the dismissal of his claims. In December 2011, Collins initiated a new lawsuit against Bank of America in state court, alleging eight claims related to negative credit reporting stemming from the foreclosure of his investment properties. These claims included willful and negligent violations of the Fair Credit Reporting Act, violations of Colorado's Uniform Consumer Credit Code, negligence, invasion of privacy, and infliction of emotional distress. Bank of America moved for summary judgment on March 1, 2012, asserting entitlement to judgment as a matter of law. Collins sought to amend his response on September 25, 2012, but Magistrate Judge Tafoya denied this request and recommended granting Bank of America's motion, leading to the dismissal of Collins’s claims. The recommendation is cited in accordance with relevant statutes and rules.

Collins alleges violations of the Fair Credit Reporting Act (FCRA), specifically that B.A. failed to report his debt as “disputed” after he challenged it with credit reporting agencies (CRAs) like Equifax, Experian, and Trans Union. Magistrate Judge Tafoya clarified that a furnisher, such as B.A., is only required to report a debt as disputed when the consumer disputes it directly with them, as outlined in 15 U.S.C. § 1681s-2(a)(3). Since Collins did not dispute the debt with B.A. directly, the FCRA provisions cited do not apply to his claims.

Collins further contended that B.A. conducted an inadequate investigation into his debt, which, if properly executed, would have revealed his dispute. Under 15 U.S.C. § 1681s-2(b)(1)(A), a furnisher must investigate upon receiving notice of a dispute from a CRA. Magistrate Judge Tafoya noted that B.A. only needed to confirm the existence of the debt and the foreclosure related to it, and Ruth Joseph, B.A.’s Assistant Vice President, affirmed that B.A. investigated Collins’s debt multiple times. The judge concluded that B.A.'s investigations met the requirements of the FCRA, recommending summary judgment in favor of B.A. for these claims.

Regarding alleged violations of Colorado's Uniform Consumer Credit Code (UCCC), Collins claimed B.A. failed to report his debt as disputed and was per se negligent. However, Magistrate Judge Tafoya determined that FCRA preempts these claims under 15 U.S.C. § 1681t(b)(1)(F), which prohibits state regulations related to the responsibilities of furnishers like B.A. Thus, both the dispute reporting claim and the negligence claim are preempted by the FCRA.

Under § 1681h(e) of the Fair Credit Reporting Act (FCRA), consumers are barred from bringing defamation, invasion of privacy, or negligence claims against consumer reporting agencies or information furnishers based on disclosures made under specified sections of the FCRA, unless false information was provided with malice or willful intent to harm. Magistrate Judge Tafoya determined that this provision preempted Collins’s state law negligence and invasion of privacy claims, as he failed to demonstrate any malice or willfulness by B.A. Consequently, these claims revert to general common law claims, which are also preempted by § 1681h(e). Furthermore, Judge Tafoya ruled that res judicata prevents Collins from pursuing these claims, as they relate to actions already adjudicated in a 2008 lawsuit concerning attempts to collect on a 2005 loan. Additionally, Collins’s claim under the Colorado Consumer Protection Act (CCPA) failed because it was based on B.A.'s failure to report his debt as disputed, which is prohibited by FCRA § 1681t(b)(1)(F). This section specifically prohibits state law requirements regarding the responsibilities of information furnishers to consumer reporting agencies.

Magistrate Judge Tafoya determined that the Fair Credit Reporting Act (FCRA) preempts any claims under the California Consumer Privacy Act (CCPA) related to this case. Additionally, the claim brought by Collins under the CCPA regarding attempts to collect on 2005 loans is barred by the doctrine of res judicata. Collins also alleged infliction of emotional and mental distress against Bank of America (B.A.). To succeed on this claim, Collins must demonstrate that B.A.'s actions were extreme and outrageous, that they were reckless or intended to cause severe emotional distress, and that he suffered severe emotional distress as a result. However, the court found B.A.’s conduct—having reviewed Collins's debt multiple times and confirming foreclosure due to default—was not extreme or outrageous, and there was no evidence of intent to cause distress. Consequently, Collins could not meet the necessary elements for this claim, which is also barred by res judicata concerning the 2005 loans. The court noted that no objections to the recommendation were filed within the specified timeframe, granting it discretion to review the recommendation for clear errors. Upon review, the court agreed with Magistrate Judge Tafoya’s thorough and sound recommendation, leading to the affirmation and adoption of the recommendation to grant B.A.’s motion for summary judgment, thereby dismissing all claims against B.A. with prejudice. The order is based on the motion for summary judgment filed by Bank of America and subsequent responses and motions related to the case.

The court determines that the case is ripe for review despite the Plaintiff's failure to file a reply, as judicial officers may rule on motions after they are filed according to D.C. COLO. LCivR 7.1C. This matter involves the Plaintiff's second lawsuit concerning foreclosures related to mortgages from 2005, necessitating a review of the first lawsuit, Collins v. Ace Mortgage Funding, LLC et al. (2008 Lawsuit). This initial case, filed pro se in state court and later removed to federal court, included claims against Countrywide Home Loans for negligence, breach of contract, fraud, and violations of Colorado statutes regarding mortgage transactions and deceptive trade practices.

The Plaintiff's claims originated from the purchase of two investment properties in Aurora, Colorado, funded by loans from Countrywide. During the loan application for the Asbury Circle property, an Ace Mortgage Funding (A.M.F.) representative assured the Plaintiff he would qualify for the mortgage and could refinance within thirty days for additional funds to repair the property. However, the refinance was denied due to credit report issues, preventing the Plaintiff from making property improvements and leading to missed mortgage payments.

The Asbury Circle property was foreclosed on April 27, 2006. The Plaintiff's attempts to refinance the Park Crescent property were also thwarted by his credit problems stemming from the Asbury Circle foreclosure. Although he managed to negotiate a modified payment plan for the Park Crescent loan, he eventually fell behind, only to discover in August 2006 that the property had already been sold at foreclosure. The 2008 Lawsuit focused on his experiences with Countrywide regarding the loan processes and subsequent foreclosures.

On May 19, 2009, Magistrate Judge Kristen L. Mix recommended granting Countrywide’s motion for summary judgment and denying Plaintiff's motion for judgment on the pleadings. District Judge Robert E. Blackburn adopted this recommendation on June 23, 2009, despite Plaintiff's objections, leading to the case's administrative closure on August 28, 2009. In July 2009, after Bank of America (B.A.) acquired Countrywide, Plaintiff disputed the reporting of two loans on his credit reports by sending letters to various credit reporting agencies (CRAs). He claimed he did not owe a debt to B.A., had closed the loan accounts himself, and had made all payments on time. B.A. investigated each CRA inquiry and confirmed the accuracy of the reported information but did not label the debt as “disputed.” The CRAs subsequently informed Plaintiff that the information was verified without significant changes. Notably, Plaintiff never directly contacted B.A. regarding the loan status. He filed a pro se lawsuit on December 29, 2011, which was removed to federal court on February 13, 2012. Plaintiff's complaint includes eight claims primarily focused on B.A.'s failure to report his account as disputed, including violations of the Fair Credit Reporting Act (FCRA) for willful and negligent violations, common law tort claims (negligence, invasion of privacy, infliction of emotional distress), and state statutory claims under Colorado law (violations of the Uniform Consumer Credit Code and the Colorado Consumer Protection Act). B.A. seeks summary judgment on all claims, asserting compliance with FCRA, lack of a private right of action for Plaintiff’s allegations, and that common law torts and statutory claims are preempted or barred by res judicata related to the 2008 lawsuit.

A pro se plaintiff's submissions are reviewed liberally by the court, which applies a less stringent standard compared to attorney-drafted documents. However, conclusory allegations lacking factual support do not suffice to establish a claim. The court cannot assume unalleged facts or construct arguments for the plaintiff. For summary judgment, the movant must show no genuine dispute exists regarding material facts and demonstrate entitlement to judgment as a matter of law. Initially, the moving party must indicate a lack of evidence supporting the non-moving party's claims, after which the burden shifts to the non-moving party to identify specific facts that create a genuine issue for trial. A material fact is one essential to resolving the claim, while a genuine dispute exists if reasonable jury evidence could favor the non-moving party. Only admissible evidence is considered during summary judgment proceedings, with all reasonable inferences drawn in favor of the opposing party. As the plaintiff is pro se, their pleadings receive a liberal interpretation, but their factual claims must be substantiated by the record. Courts will not adopt a version of events that is blatantly contradicted by the record when determining summary judgment.

Plaintiff's motion to amend his response was previously denied by the court, which ruled that his submissions constituted an impermissible surreply under local rule D.C.COLO. LCivR 7.1C. Despite reintroducing similar documents as a substitution for his earlier response, the court found that the content served primarily to rebut Defendant B.A.'s argument concerning res judicata, an argument that had been presented in the original motion. The court noted that the Tenth Circuit allows surreplies only when new material is raised in a reply brief, which was not the case here. Accepting the amended submissions would prejudice Defendant B.A., necessitating a new reply and complicating the proceedings unnecessarily. Furthermore, the proposed amendments did not clarify the essence of Plaintiff's claims, particularly whether they pertained to B.A.'s debt collection methods, already litigated, or solely to the reporting of a disputed debt. Consequently, the court denied Plaintiff's motion to withdraw and amend his response.

Regarding violations of the Fair Credit Reporting Act (FCRA), the excerpt outlines the responsibilities of consumer reporting agencies and furnishers of information to ensure fairness and accuracy. Specifically, under 15 U.S.C. § 1681s-2, furnishers are prohibited from transmitting inaccurate information and must correct and update any information to maintain its completeness and accuracy. Additionally, if a consumer disputes information directly with a furnisher, the furnisher cannot report that information without indicating it is disputed. However, since Plaintiff did not dispute his loans with Defendant B.A. before the information was sent to credit reporting agencies, the provisions of section 1681s-2(a) are not applicable. Section 1681s-2(b) outlines the duties of furnishers when they receive notice of a dispute from a credit reporting agency, which is relevant to this case.

A Consumer Reporting Agency (CRA) must notify a furnisher of any disputed credit entry, prompting the furnisher to investigate the dispute using all relevant information provided by the CRA and report findings back to the CRA (15 U.S.C. § 1681s-2(b)(1)(A)). If the furnisher identifies any inaccuracies or incompleteness in the information it supplies to any CRA, it is required to inform all other CRAs of the error and take corrective action, such as modifying, deleting, or blocking the reporting of the inaccurate information (15 U.S.C. § 1681s-2(b)(1)(D) and § 1681s-2(b)(1)(E)). There is no private right of action for violations of the furnisher's duties under section 1681s-2(a) when a consumer disputes information directly with the furnisher, as established in cases like Sanders v. Mountain America Federal Credit Union and Pinson v. Equifax Credit Information Services. The Tenth Circuit has clarified that private claims for reporting inaccuracies are limited to actions against CRAs.

The legal issue discussed is whether a duty to report disputed information becomes enforceable under section 1681s-2(b) once an investigation is triggered. Some courts, such as in Gorman v. Wolpoff and Saunders v. Branch Banking, held that failure to report a debt as disputed, after being notified of the consumer's dispute, creates a private cause of action under section 1681s-2(b). However, these cases are not applicable here, as the Plaintiff did not dispute the debt directly with the furnisher before engaging with CRAs; thus, the process through the CRA alone does not activate a furnisher's duty to report the debt as disputed. The Plaintiff argues that a prior lawsuit served as notice to the furnisher, but this claim does not align with the legal requirements outlined.

Section 1681s-2(a)(8)(D) outlines the criteria for submitting a notice of dispute, which the court finds does not include the act of filing a lawsuit. The Plaintiff limits the relevant reporting dates to April and May 2011, which are after the dismissal of the 2008 Lawsuit, indicating that any dispute from that case had been resolved. Consequently, Defendant B.A. had no obligation to report the Plaintiff's debt as disputed, negating claims of violations under the Fair Credit Reporting Act (FCRA).

The Plaintiff asserts that Defendant acted unreasonably during the reinvestigation of his dispute requests, claiming that Defendant should have recognized previous disputes concerning the same debts. However, the court clarifies that under section 1681s-2(b), the furnisher must conduct a reasonable investigation only upon receiving a notice of dispute from a Consumer Reporting Agency (CRA). While the statute does not explicitly state a reasonableness requirement, courts have inferred one, meaning the Plaintiff must demonstrate that the investigation was unreasonable.

Summary judgment is appropriate if the reasonableness of the Defendant's procedures is clear. The court evaluates the investigation's procedures rather than its outcomes, emphasizing that the investigation is procedural and must be tailored to the specific dispute presented by the CRA. The Plaintiff's disputes were limited to brief claims of non-responsibility for the debt, lacking supporting facts or documents. As such, Defendant BAC's investigation only needed to confirm that the Plaintiff owed a debt and that foreclosure had occurred. The absence of evidence suggesting that the original investigation was flawed or that new information warranted a re-examination means that the Defendant's decision not to repeat the investigation was not unreasonable. An affidavit from Defendant further supports that the necessary facts were investigated.

Defendant BAC conducted a sufficient investigation regarding the Plaintiff's claims related to the 2005 Loans. Plaintiff has not provided evidence to absolve himself of liability, and his disagreement with the foreclosure process or Countrywide’s handling of his modification request does not change the fact that he incurred a debt and failed to make required payments, which led to the foreclosure. These points are confirmed by findings from the 2008 Lawsuit and Plaintiff's own admissions. The court finds that the information provided to credit reporting agencies (CRAs) by Defendant was accurate, and thus, Defendant is not liable under section 1681s-2(b). 

In his third claim, Plaintiff alleges that Defendant's failure to report the debt as disputed violated Colorado's Uniform Consumer Credit Code (UCCC). In his fifth claim, he asserts per se negligence under the UCCC. Plaintiff argues that the loan agreement's clause binding it to applicable laws means the UCCC governs both the mortgage transaction and subsequent credit reporting. However, Defendant contends that the Fair Credit Reporting Act (FCRA) preempts the UCCC and asserts that the UCCC does not apply to mortgage transactions. The court agrees, stating that federal law, including the FCRA, takes precedence over conflicting state laws, as established by the Supremacy Clause of the Constitution. The court concludes that the UCCC is preempted by the FCRA, which contains express preemption language.

Section 1681t(b)(1)(F) of the Fair Credit Reporting Act (FCRA) explicitly prohibits state regulation of matters covered under section 1681s-2, while section 1681h(e) addresses common law claims. The Tenth Circuit has not definitively resolved the extent of FCRA's preemption over state law. In the case of Stich v. BAC Home Loans Servicing LP, Judge Christine M. Arguello identified three preemption approaches: total preemption of state law, a temporal approach based on the timing of claims related to notice, and a statutory approach that applies section 1681t(b)(1)(F) to state statutory claims and section 1681h(e) to common law claims. Judge Arguello favored the statutory approach, which preserves a limited set of common law claims while preempting statutory claims. This court concurs and applies the statutory approach to the Plaintiff's claims three and five, which are governed by section 1681s-2(b), leading to the conclusion that these claims cannot proceed.

In claims four (common law negligence) and seven (common law invasion of privacy), the Plaintiff has presented conflicting arguments regarding the basis for these claims, asserting they are not linked to FCRA disclosures but rather to unfair debt collection practices. However, the Plaintiff also implies that damages are sought for each transmission of a credit report. The Defendant argues that FCRA preempts these claims, lacks sufficient evidence for support, and that they are barred by res judicata due to a previous lawsuit. The court finds that both preemption and res judicata bar the claims. Specifically, section 1681h(e) prohibits state common law actions related to information reporting, except for claims based on malicious or willful misconduct. Following the statutory approach, only claims against furnishers that demonstrate malice or intent to injure can survive preemption.

Plaintiff asserts that at the current stage, only a pleading of willful and wanton negligence by the Defendant is necessary, not proof. However, the court clarifies that at the summary judgment stage, Plaintiff must provide specific facts demonstrating a genuine issue for trial rather than relying solely on allegations. The court has previously determined that the Defendant had no obligation to report Plaintiff's debt as disputed and that their investigations were reasonable, concluding that there was no violation of the Fair Credit Reporting Act (FCRA) by the Defendant. Consequently, the malice or willfulness required to sustain Plaintiff's common law claims cannot be established, leading to the dismissal of these claims concerning Defendant's credit reporting actions.

Additionally, the court examines the application of res judicata concerning Plaintiff's claims against Countrywide related to the 2005 Loans. Res judicata, encompassing both claim and issue preclusion, bars relitigation of claims or issues that were or could have been decided in a prior action with a final judgment on the merits. Collateral estoppel, a related doctrine, requires an identity of issues but not necessarily the same parties. Both doctrines necessitate that the parties had a fair opportunity to litigate. Under Colorado law, res judicata prevents relitigation of all issues actually and potentially decided in earlier proceedings.

Res judicata prevents the re-litigation of a claim that has already been decided if four criteria are met: 1) the initial judgment is final, 2) the subject matter is identical, 3) the claims for relief are the same, and 4) the parties or their privies are the same. In the 2008 lawsuit, all claims against Countrywide were either dismissed for failing to state a claim or resolved in favor of Countrywide, establishing a judgment on the merits. Plaintiffs' argument that a technical dismissal does not invalidate the issues is countered by case law affirming such dismissals as adjudications on the merits. 

The 2008 lawsuit involved parties in privity, as Defendant BAC is the successor to Countrywide. Under Colorado law, privity requires substantial identity of interests and a functional relationship, both of which are satisfied here since Bank of America purchased Countrywide. The claims related to foreclosure were also part of the 2008 lawsuit, where it was determined that Plaintiff was in default on the loans, and Countrywide was authorized to foreclose. Consequently, any claims stemming from Countrywide's collection efforts are encompassed within the earlier lawsuit.

Moreover, there is an identity of claims for relief, as Plaintiff seeks damages for the same injury—harm to credit due to Countrywide's actions during foreclosure—that was addressed in the 2008 lawsuit. Therefore, Plaintiff's claims based on Countrywide's collection efforts are barred by res judicata. Lastly, Plaintiff's sixth claim alleges a violation of the Colorado Consumer Protection Act.

Plaintiff alleges that Defendant violated the Colorado Consumer Protection Act (CCPA) by not reporting his debt as disputed, specifically citing Colo.Rev.Stat. 6-1-105. However, the CCPA claim is based on Countrywide's debt collection efforts related to 2005 Loans, not on Fair Credit Reporting Act (FCRA) reporting issues. The court characterizes the claim as hybrid, analyzing it under preemption and res judicata. First, the CCPA claim regarding the failure to report the 2005 Loans as disputed is preempted by FCRA, per section 1681t(b)(1)(F). Second, the claim is barred by res judicata due to prior litigation concerning the 2005 Loans in the 2008 Lawsuit. Consequently, summary judgment is granted in favor of the Defendant regarding this claim.

Additionally, Plaintiff's eighth claim involves infliction of emotional and mental distress, connected to both the credit reporting and collection attempts. For intentional infliction under Colorado law, Plaintiff must demonstrate extreme conduct that was reckless or intended to cause severe distress, resulting in such distress. Outrageous conduct is defined as behavior that exceeds all bounds of decency. For negligent infliction, the Plaintiff must show that Defendant's negligence created an unreasonable risk of harm, leading to fear for safety with physical consequences. The court previously determined that Defendant's credit reporting complied with FCRA, thus negating negligence. Similar to the earlier claims, this eighth claim is also barred by res judicata regarding collection attempts for the 2005 Loans. As a result, the court denies Plaintiff's motion to amend the response and recommends granting Defendant's motion for summary judgment, dismissing all claims and closing the case.

Within fourteen days of receiving a copy of the Magistrate Judge’s Recommendation, parties may file written objections with the Clerk of the United States District Court for the District of Colorado. Objections must be both timely and specific to preserve issues for de novo review by the district court or for appellate review. General objections that do not clearly articulate the basis for disagreement will not be preserved. Failure to file timely objections may result in a waiver of the right to appeal the district court’s judgment based on the Magistrate Judge’s recommendations. Although a district court may choose to review a recommendation de novo despite a lack of objections, the "firm waiver rule" still applies. Various cases illustrate these principles, underscoring the importance of adhering to the objection process to maintain the right to appeal. Additionally, the excerpt references a statute regarding prohibited acts in mortgage transactions and outlines potential liabilities for willful or negligent noncompliance with consumer protection laws, including actual damages, punitive damages, and attorney's fees.

A consumer may recover from a liable entity the sum of actual damages incurred due to a failure, as well as costs and reasonable attorney's fees if they successfully enforce this liability. The UCCC § 5-5-109 outlines judicial handling of "unconscionable" debt collection practices, applying a standard of review that is less stringent than "clearly erroneous" and less than de novo review. When a Consumer Reporting Agency (CRA) marks an account as disputed, it does not include that account in credit score calculations, effectively disregarding the debt. The term "furnishers of information" encompasses various creditors, such as banks, but is not explicitly defined in the Fair Credit Reporting Act (FCRA). The defendant, BAC, acknowledges its role as a furnisher of information under the FCRA. Notably, some of the plaintiff's dispute letters from late 2009 reference a settlement letter that is not included in the submissions and is irrelevant to the claims based on credit reporting dates in April and May 2011. Federal law regarding claim preclusion in the Tenth Circuit requires: a prior suit must end in a judgment on the merits, parties must be identical or in privity, the suit must be based on the same cause of action, and the party must have had a full and fair opportunity to litigate the previous claim. Federal law also integrates state law for substantive issues like privity.