Miller v. GE Capital Mortgage Services, Inc. (In Re Miller)

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 02-1050

In Re: WILLIAM T. MILLER, III,

Debtor.
------------------------------

WILLIAM T. MILLER, III,

Plaintiff - Appellant,

versus

GE CAPITAL MORTGAGE SERVICES, INCORPORATED,

Defendant - Appellee,

and

GEORGE I. VOGEL, II,

Trustee.

Appeal from the United States District Court for the Western
District of Virginia, at Roanoke. Samuel G. Wilson, Chief District
Judge. (CA-01-733-7)

Argued: September 24, 2002 Decided: February 3, 2005

Before WIDENER, NIEMEYER, and GREGORY, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Gary Michael Bowman, Roanoke, Virginia, for Appellant.
Hilary Stephen Cairnie, DYKEMA GOSSETT, P.L.L.C., Washington, D.C.,
for Appellee. ON BRIEF: Scott W. Dales, DYKEMA GOSSETT, P.L.L.C.,
Washington, D.C., for Appellee.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

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PER CURIAM:

Plaintiff, William T. Miller, III, appeals from the district

court’s decision that a private right of action does not exist

under 12 U.S.C. § 1715u(a). We affirm.

William T. Miller, III, owned a single-family home located at

904 Locust Drive, Pearisburg, Virginia. The home was subject to a

mortgage held by G.E. Capital Mortgage Services, Inc.(“G.E.

Capital”). On February 13, 2001, Miller filed a voluntary petition

for bankruptcy under Chapter 7 of the Bankruptcy Code. On March

22, 2001, Miller filed an adversary proceeding against G.E. Capital

in the Western District of Virginia to avoid the prepetition

foreclosure of his home.

Following an adverse decision by the bankruptcy court, on

appeal to the district court, Miller argued that an implied private

right of action existed under 12 U.S.C. § 1715u(a) of the National

Housing Act and that the case should be remanded to the bankruptcy

court for analysis under that statute. G.E. Capital agreed

that § 1715u was applicable but argued that the section did not

create a private remedy for a mortgagee’s non-compliance with

mortgage servicing regulations. The district court examined

§ 1715u(a) and determined that a private right of action was not

implied. From this order Miller appeals.1

1
G.E. Capital initially made the argument that Miller did not
have standing to pursue his claim, taking the position that any
such right was the property of his trustee in bankruptcy. Any

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 Miller argues as error the district court’s decision that 12

U.S.C. § 1715u(a) does not imply a private cause of action for a

mortgagor to sue a mortgagee for failure to comply with § 1715u(a)

loss mitigation requirements. We review this claim de novo. See

In re Richman, 104 F.3d 654, 656 (4th Cir. 1997).2

Private rights of action, explicit or implicit, to enforce

federal laws must be created by Congress. See Alexander v.

Sandoval, 532 U.S. 275, 286-87 (2001). In determining whether

Congress has implied a private right of action in a federal

statute, courts have weighed the following four factors articulated

by the Supreme Court in Cort v. Ash:

First, is the plaintiff ‘one of the class for whose
especial benefit the statute was enacted,’ -- that is,
does the statute create a federal right in favor of the
plaintiff? Second, is there any indication of
legislative intent, explicit or implicit, either to

dispute about standing, however, has been resolved by the order of
the bankruptcy court, not appealed from, of May 15, 2002, that
Miller’s claim against G.E. Capital was held to be a burdensome
asset and directed the trustee to abandon his interest in such
claim. Thus, the position taken by G.E. Capital, that Miller
lacked standing to pursue his claim, was made moot by the order of
the bankruptcy court of May 15, 2002, and the same is dismissed for
that reason.
2
Miller also argued in the proceedings below that G.E.
Capital had not engaged in certain loss mitigation procedures
required by “24 C.F.R. 201.50 [§ 203.600, et seq.] such as making
personal contact with Mr. Miller regarding the default, discussing
a repayment plan with Mr. Miller, or notifying Mr. Miller of his
right to reinstate the loan prior to the foreclosure sale.” Br.
p.2. Any violation of those regulations, however, is argued on
appeal only in the context of the sole issue raised: “Did the
district court err when it ruled that the appellant has no private
right of action under 12 U.S.C. § 1715u?” Br. p.1.

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 create such a remedy or to deny one? Third, is it
consistent with the underlying purposes of the
legislative scheme to imply such a remedy for the
plaintiff? And finally, is the cause of action one
traditionally relegated to state law, in an area
basically the concern of the States, so that it would be
inappropriate to infer a cause of action based solely on
federal law? (citations omitted)

Cort v. Ash, 422 U.S. 66, 78 (1975).

In cases subsequent to Cort v. Ash, the inquiry has centered more

on Congress’s intent to create a federal cause of action. See

Gonzaga University v. Doe, 536 U.S. 273, (2002); Alexander v.

Sandoval, 532 U.S. 275, 286-87 (2001). In Love v. Delta Air Lines,

310 F.3d 1347, 1351-52 (11th Cir. 2002) the Eleventh Circuit noted

that “[T]he Supreme Court has gradually receded from its reliance

on three of the [. . .] four [Cort] factors,” rather relying on

legislative intent to create a private right of action as the

touchstone of its analysis. Thus, we review the text and structure

of § 1715u(a) “to determine whether it displays an intent [by

Congress] to create not just a private right, but also a private

remedy.” See Alexander v. Sandoval, 532 U.S. 275, 286 (2001).

To determine whether a statute creates a federal private

right, we look to the statutory text for “‘rights-creating’

language.” See Alexander v. Sandoval, 532 U.S. 275, 288 (2001).

“Rights-creating language” is language that “explicitly confer[s]

a right directly on a class of persons that include[s] the

plaintiff.” Cannon v. University of Chicago, 441 U.S. 677, 690

n.13 (1979). Section 1715u(a) provides:

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 Upon default of any mortgage insured under this
subchapter [12 U.S.C.A. § 1707 et seq.], mortgagees shall
engage in loss mitigation actions for the purpose of
providing an alternative to foreclosure (including but
not limited to actions such as special forbearance, loss
modification, and deeds in lieu of foreclosure, but not
including assignment of mortgages to the Secretary under
section 204(a)(1)(A) [12 U.S.C.A. § 1710(a)(1)(A)]) as
provided in regulations by the Secretary.

12 U.S.C. § 1715u(a).

We agree with the district court in its finding that

§ 1715u(a) lacks “rights-creating” language. Section 1715u(a)

addresses only the mortgagees’ obligation to engage in loss

mitigation. It does not mention nor explicitly confer a right upon

mortgagors, such as Miller.

Furthermore, the statute’s focus is on regulating mortgagees

not protecting mortgagors. Miller argues that § 1715u(a) is

intended to encourage loss mitigation, therefore § 1715u(a) implies

a cause of action in his favor. But an examination of § 1715u

shows that the losses which are to be mitigated do not include an

assignment of the mortgage to the Secretary. And just as

important, § 1715u(f) provides that “[n]o provision of this

chapter, or any other law, shall be construed to require the

Secretary to provide an alternative to foreclosure for mortgagees

on 1- to 4- family residences.” (italics added) This provision

indicates Congress’ intent not to require the HUD Secretary to

provide a cause of action as a loss mitigation alternative for

single family homeowners like Miller. Thus, it is evident Congress

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did not intend to imply a private cause of action in favor of the

mortgagor by enacting § 1715u(a).

We also consider the structure of the statute, within which

the provision in question is embedded, to determine whether the

statute provides a remedy or an enforcement mechanism. See

Alexander v. Sandoval, 532 U.S. 275, 289-91 (2001). Miller argues

that because there is no explicit sanction for mortgagees’ failure

to engage in loss mitigation the provision is meaningless.

As the district court found, Congress expressly included a

comprehensive enforcement mechanism to police mortgagees’

compliance with the loss mitigation procedures and other provisions

by establishing the Mortgagee Review Board. See 12 U.S.C.

§ 1708(c). The Board is authorized to pursue a variety of actions

against a noncompliant mortgagee, including, but not limited to

issuing a letter of reprimand, placing the mortgagee on probation,

suspending the mortgagee, and withdrawing the mortgagee for not

less than one year. See 12 U.S.C. § 1708(c). In addition, the HUD

Secretary may impose civil monetary penalties against the mortgagee

for failure to engage in loss mitigation. See 12 U.S.C. § 1735f-

14(b)(1)(I). The statutory remedies at the disposal of the

Secretary and the Board are extensive and their inclusion indicates

that Congress did not intend to create a private right of action

for mortgagors such as Miller. As the Supreme Court stated in

Sandoval, “[t]he express provision of one method of enforcing a

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substantive rule suggests that Congress intended to preclude

others.” Alexander v. Sandoval, 532 U.S. 275, 290 (2001).

Miller also argues that the legislative history of the statute

points toward the creation of an implied private right of action.

We have considered the same and are of opinion that the legislative

history is not in conflict with the clear indication in the statute

itself that no private right of action is implied.

In conclusion, we decide that the plaintiff has not

demonstrated that Congress intended to imply a private right of

action in § 1715u(a). Accordingly, the judgment of the district

court is

AFFIRMED.

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